Orange County is unable to take advantage of a new law that lets counties keep a portion of the fines levied against people caught working as real estate agents without a license because it’s one of the few metropolitan counties in the state to resist setting up special fraud prosecution units and trust funds.

The new law, signed Monday by Gov. Arnold Schwarzenegger, is designed to beef up weak enforcement of real estate license laws. Currently, the state Department of Real Estate can only issue desist and refrain orders to unlicensed agents, orders that are often ignored, state officials said. And prosecutors usually failed to act when such orders were ignored.

“These low-profile license violations were often overlooked unless there was substantial financial loss,” explained state Sen. Jack Scott, author of the new law, which will take effect on Jan. 1.

The measure increases maximum fines from $10,000 to $20,000 for individuals and from $50,000 to $60,000 for corporations. It also allows counties to keep any amount over $10,000 levied against individual perpetrators and any amount over $50,000 levied against unlicensed corporations..

But there’s a catch. To keep the excess amount, the county first must have established a Real Estate Fraud Prosecution Trust Fund, something that O.C. officials have consistently refused to do for at least 12 years.

The trust fund is designed to raise money for real estate fraud prosecutions by charging up to $2 per document filed with the county clerk-recorder’s office (deeds, liens, default notices, etc.). The Orange County Clerk-Recorder’s Office received at least 760,000 such documents in 2007, according to its Web site, enough to generate at least $1.5 million.

Local leaders have argued, however, that such a fee amounts to a new tax.

In December 2005, an Orange County grand jury issued a report advocating that Orange County impose the $2-per-document fee and set up the fraud prosecution trust fund. County CEO Thomas Mauk wrote back that such a fee is unwarranted and redundant.

“The Orange County Board of Supervisors approved the establishment of the District Attorney’s White Collar Crime Prosecution Team (WCCPT). The establishment of this unit bolstered the work of the Economic Crimes Unit, which handles prosecution of fraud cases involving a large variety of financial crimes and schemes, including embezzlement, identity theft, investment, elder and real estate fraud.”

So do Mauk and District Attorney Tony Rackaukas now favor creation of the trust fund because of this new law?

The DA’s office and CEO’s office have been asked for a response. Stay tuned …

For more than a decade, Jeff Collins has followed housing and real estate, covering market booms and busts and all aspects of the real estate industry. He has been tracking rents and home prices, and has explored solutions to critical problems such as Southern California’s housing shortage and affordability crisis. Before joining the Orange County Register in 1990, he covered a wide range of topics for daily newspapers in Kansas, El Paso and Dallas. A Southern California native, he studied at UC Santa Barbara and UC Irvine. He later earned a master’s degree from the USC School of Journalism.